Warren Buffett, the Keystone Pipeline, and Crony Capitalism

Warren Buffett, the Keystone Pipeline, and Crony Capitalism

A decades-long crusade by the environmental left to
convince us that oil is evil, unsustainable, and destroying our planet has yet
to accomplish its goal of eliminating oil as a fuel, but it has succeeded in
making oil damned expensive. However, new technologies for the extraction and
transport of previously unrecoverable oil promise to reverse that
trend.

One such project is the TransCanada Keystone XL
pipeline, which will transport bitumen from the oil sands of Alberta to the
refineries and ports along the Gulf coast. It will also feature a spur that
will pick up oil from the vast Bakken oil formation in North Dakota. The
benefit to our economy and energy security is obvious.

I live in Nebraska, one of the states that will be
host to a segment of the pipeline. We have witnessed a remarkably contentious
debate locally regarding the construction of the Keystone XL, revealing some
rather disturbing attitudes regarding truth and its role in public discourse. I
suppose it was naïve to think that the wild-eyed excesses of the radical leftist
environmental movement would find little purchase in the commonsense plains of
Nebraska, but the insupportable claims and charges being tossed about by the
anti-pipeline crowd have proven that green insanity can take root even in our
generally sensible state.

The opposition, led most loudly by a group called BOLD
Nebraska, claims a catastrophic risk of contamination to the Ogallala aquifer
should the pipeline suffer a breach. The aquifer underlies virtually all of
Nebraska, and several other states, and supplies drinking water and irrigation
to millions of people. It is understandable that reasonable people would
express concern over potential hazards to such a valuable resource, and it is
this reasonable concern that BOLD Nebraska is exploiting with a combination of
half-truths, innuendo, and outright lies.

As required by law, an Environmental Impact Statement
(EIS) has been prepared for this project. The science reflected in the
statement is sound, and it illustrates a comprehensive examination of the
project’s effects, likely risks, and reasonable alternatives. The EIS arrives
at a conclusion supported by recognized scientific method and was conducted by
top experts in their fields. The proposed route for the Keystone XL pipeline
is, in fact, the safest of the available routes.

The reality of the geology and hydrology underlying
the proposed pipeline route precludes any wholesale contamination of the
aquifer. To understand why, it is important to understand what an aquifer is —
and what it isn’t. It is a geological formation that is structured in
such a way as to hold water in quantity. It is not an “underground
lake.” It is a vast filter system consisting of layer upon layer of sedimentary
rock, silt, clay, and sand that in Nebraska lies much closer to the surface on
the western portion of the aquifer than on the eastern
portion.

For this reason, the water flow within the aquifer is
easterly, making it a physical impossibility for any oil leaked along the
proposed route to flow “uphill” to the 75%-80% of the aquifer that lies to the
west of the pipeline. Additionally, both the oil and the chemical additives
that make it easier to pump are lighter than water and would not emulsify.
Leaked oil will simply migrate toward the nearest substrate, remaining
localized.

This is according to Professor James Goeke, a
hydro-geologist who retired from the University of Nebraska earlier this year
after a forty-year career of studying the Ogallala aquifer and the Sand Hills
region that overlies it. He is the foremost expert on the aquifer,
and he informs us that the geological structure of the formation precludes any
possibility that oil could travel for more than a few hundred feet in any
direction before encountering substrate. Quite simply, the aquifer and the land
above it are not in any real danger from this project.

Given that the science clearly shows the that pipeline
opposition is persisting in perpetuating a demonstrable falsehood, it is
reasonable to question the opposition’s motives. According to their own websitepostings andeditorializing in
newspapers across the nation, their ultimate aim is not to reroute the pipeline,
but rather to halt its construction now and forever. The thinking is, if the
pipeline is halted, then the oil will stay in the ground, thereby protecting the
earth from the ravages of such a “filthy fuel.” Their tactic is to suggest a
simple rerouting around the aquifer for the sake of safety.

The environmentalists well know that changing the
route at this stage will result in the invalidation of the existing EIS (the
real aim of the protests), thereby creating a need to begin the entire process
anew. This time, leftists are confident that they will be able to demagogue and
politicize that process sufficiently to preclude another approval, resulting in
the exercise of a “green veto” despite the clear conclusions of sound
science.

So what happens if the pipeline is never built? Well,
to fully explore that, it is instructive to look at the players in this game.
One can find the usual suspects among the hysterical left: Hollywood
environmentalists such as Daryl Hannah and progressive agenda-driven scientists
like global-warming alarmist James Hansen of NASA. These, however, are merely
the “useful idiots” in the process, and not the actual players. I mentioned
BOLD Nebraska earlier. This group is funded almost entirely by Dick Holland,
who has been a close friend and business associate of Warren Buffett since the
1960s.

Holland was an original investor in Buffett’s
Berkshire Hathaway, and the two have remained close friends ever since. Buffett
and Holland also share a similar political philosophy, both being liberal
Democrats, with Holland giving exclusively to the Democratic Party. So why does
this matter? It potentially answers a few questions about the recent behavior
of Buffett and Obama, and perhaps the real reason behind the Nebraska-centric
animus toward the pipeline.

A year after the election of Obama, Warren Buffett
bought a giant railroad, the Burlington Northern Santa Fe.
The BNSF has more than 32,000 miles of track and
right-of-way in this nation, running from the west coast and through the
agricultural heartland of America. It is also hauls coal from the mines in
Montana and Wyoming and is the railroad with the best existing north-south
infrastructure. In fact, it’s quite well-situated to perform precisely the task
for which TransCanada has proposed to build a pipeline.

Should the pipeline fail, the oil will still be
extracted, but it will then
be transported by rail,
and Mr. Buffett, thanks to the efforts of his friend Mr. Holland, will be
uniquely situated to derive a fortune from that business, as well as enhance the
value of his holdings in Conoco-Phillips petroleum. Is it possible that Warren
Buffett’s assistance to Obama in both policy and public relations lately may be
his way of trying to tip the regulatory scales in his favor? After all, nothing
says “I love you” to a Democrat better than a public plea for more
taxes.

In any case, the opposition to the pipeline is not
only tainted, but intellectually and scientifically bankrupt. BOLD Nebraska are
correct when they screech that there is an agenda being served here, but it is
not big oil, environmentalism, or even green energy; it appears to be
garden-variety crony capitalism, an Obama administration
specialty.